Two "big tent" parties are no longer relevant in a era of division. Rove and his ilk have shown that the politics of division are stronger and more appealing to US than the politics of inclusion.
I think we need to move to a more parliamentary set-up of multiple parties (e.g. primary interest associations such as social conservatives, fiscal conservatives, social progressives, redistributionists, etc...) and form alliances where and when it makes sense in furthering their policy objectives.
Currently, people are forced into two narrow definitions of American politics, and then they fight over which group will control that narrow definition. Instead, let's start with the broader political groups and encourage narrow associations on specific policy initiatives that make sense.
In America we continue to hold onto a false sense of being the same when it is increasingly obvious that we are not and, furthermore, don't want to be the same as our neighbors.
We need parties that really represent our beliefs.